Not upheld: unfair credit relationship under Section 140A of the Consumer Credit Act 1974; connected lender liability under Section 75 of the Consumer Credit Act 1974; alleged breach of Regulation 14(3) of the Timeshare Regulations; undisclosed commission complaint against Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Decision detail

Summary

Mr P purchased Fractional Club timeshare membership for £5,950 in August 2013, financed through a credit agreement with Clydesdale Financial Services Limited. He later complained that the product was misrepresented as an investment in breach of Regulation 14(3) of the Timeshare Regulations, that the Supplier breached contract by not securing guaranteed holiday accommodation, and that the credit relationship was unfair due to undisclosed commission of £595 paid to the Supplier. The ombudsman found no actionable misrepresentation regarding investment potential or holiday availability, and concluded that even if Regulation 14(3) was breached, this was not material to Mr P's decision to purchase. The ombudsman further found that the commission, at 10% of the loan amount, was not sufficiently high to render the credit relationship unfair, and that Mr P would have proceeded with the purchase even with full disclosure of the commission arrangements.

The Ombudsman's reasoning

The ombudsman found no actionable misrepresentation by the Supplier regarding investment potential, guaranteed end date, exclusivity, or holiday availability. While acknowledging the Supplier may have breached Regulation 14(3) by marketing the product as an investment, the ombudsman concluded this was not material to Mr P's decision, as the prospect of financial gain was not an important motivating factor in his purchase. The commission of £595 (10% of amount borrowed) was not sufficiently high to render the credit relationship unfair, particularly when compared to the 55% commission in the Supreme Court's Johnson case. The ombudsman applied the principles from Hopcraft, Johnson and Wrench, finding that the Supplier did not owe Mr P a fiduciary duty and that Mr P would have proceeded with the purchase even with full disclosure of commission arrangements.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website